Wells Fargo is still out of the woods when it comes to regulatory mess.
That’s the message the bank sent in its recent filing with the Securities and Exchange Commission this week. Wells Fargo said it was “likely to experience problems or delays in meeting multiple US regulators’ requests – a subtle but significant change in language from previous filings in which the bank said it” may “be Delays could occur.
The development means that removing key regulatory restrictions on Wells Fargo – an edict by the Federal Reserve forcing the bank to freeze its balance sheet at 2017 levels – could take even longer, JPMorgan analyst Vivek Juneja said on Wednesday in a research note.
“The main risk is that any further problems or delays could increase control and further delay the asset cap lift,” Juneja said in the note, citing comments from Fed Chairman Jerome Powell that the asset cap will not be lifted until compliance -If problems arise are resolved. Spending related to the regulatory overhaul could stay higher for longer, the analyst said.
The reveal shows that CEO Charles Scharf, who took over more than two years ago, is still busy cleaning up the mess exposed by the bank’s 2016 fake account scandal. In September the auditor’s office fined the bank $ 250 million tied to its mortgage department.
Scharf told analysts last month that the latest fine suggests that despite the resolution of two consent orders, the company is “likely to suffer setbacks” over the next few years as the CEO and his alternates work to improve its compliance functions.
When an analyst pressed for more information about the setbacks, Scharf noted the complex consent orders the bank was working on.
“I just want to make sure people understand that we have these things that are out there and don’t want you to be surprised when something happens,” Scharf said.
A Wells Fargo spokesman declined to comment beyond filing. The bank’s stocks are up more than 70% this year on a broader recovery in financial firms.
– CNBC’s Michael Bloom contributed to this report.
